Amid mounting concern over fall in coal despatches owing to Covid-19-led demand slump, Coal India (CIL) has sought the government’s consideration for lower or discounted railway tariff for transportation of domestic coal booked by consumers that will facilitate import substitution.
CIL is primarily tapping domestic coal-based power plants and non-power sector consumers who are importing coal. Between them, they imported around 150 million tonne (MT) in 2019-20. CIL is planning to substitute their supplies with domestic coal, which would help the coal major step up its coal sales.
According to CIL officials, the move would result in curtailing forex outgo arising out of coal imports and help CIL expand its supply volumes. CIL continues to be the best with tepid demand for coal with most of the customers shying away from lifting adequate quantities.
“Power Sector which makes up close to 80% of CIL’s total supplies is brimming over with nearly 50 MT of coal sufficient for 29 days of consumption ending May, 2020.
Already many plants have started restricting supplies from CIL further shrinking the despatches of coal companies. For the month of May, power sector lifted only around 75% of coal at 30.15 MT from the CIL sources, compared to what it did in the month last year, resulting in a 10.23 MT slide in supplies,” the coal PSU said.
During May’19, power utilities had lifted 40.38 MT of coal.
“The company can work on supply side improving facilities to our customers like reduction in reserve prices in auctions and liaising with Railways on their behalf. We can cater to the demand but cannot create it,” said an official of the company.
The demand for coal is based on many factors like logistics, freight movement, fluctuation in international prices and most importantly, the working capital liquidity of the consumers.
